Marie's Fashions Is Considering a Project That Will Require $39,000

question 55

Multiple Choice

Marie's Fashions is considering a project that will require $39,000 in net working capital and $68,000 in fixed assets. The project is expected to produce annual sales of $78,500 with associated cash costs of $41,000. The project has a four-year life. The company uses straight-line depreciation to a zero book value over the life of the project. Ignore bonus depreciation. The tax rate is 25 percent. What is the operating cash flow for this project?

• A) $33,325
• B) $27,580
• C) $32,545
• D) $25,760
• E) $32,375

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